Boeing signs major deal to sell aircraft to Iran Air

Iran's transportation minister said possible deals between the Islamic Republic and Boeing could be worth as much as $25 billion. In January, Airbus announced an agreement with Iran for 118 new jets,

ByJon Gambrell and Nasser Karimi, Associated PressJune 21, 2016

A Boeing 747 of Iran's national airline is seen at Mehrabad International Airport in Tehran in 2003. Boeing Co. has confirmed signing an agreement with Iran Air “expressing the airline's intent” to buy its aircraft.

Dubai, United Arab Emirates — Boeing Co. said Tuesday it signed an agreement with Iran Air "expressing the airline's intent" to buy its aircraft, setting up the biggest business deal between the Islamic Republic and America since the 1979 U.S. Embassy takeover in Tehran.

Already, an Iranian official has suggested his country as a whole may purchase $25 billion in airplanes from Chicago-based Boeing, welcome news to workers on its massive assembly line north of Seattle and company stockholders.

However, the long-standing enmity between the U.S. and Iran, as well as other sanctions, still could complicate any agreement — even after last year's nuclear deal.

Boeing issued a statement to The Associated Press saying that it signed the Iran Air agreement "under authorizations from the U.S. government following a determination that Iran had met its obligations under the nuclear accord reached last summer."

"Boeing will continue to follow the lead of the U.S. government with regards to working with Iran's airlines, and any and all contracts with Iran's airlines will be contingent upon U.S. government approval," it said.

Boeing's statement offered no further details. Fakher Daghestani, a Dubai-based spokesman for the manufacturer, declined to elaborate.

Iran Air, the country's national carrier, said this week it wants to buy new generations of the Boeing 737, as well as the 300ER and 900 version of the Boeing 777.

Earlier Tuesday, Iran's Transportation Minister Abbas Akhoundi said possible deals between the Islamic Republic and Boeing could be worth as much as $25 billion, on par with the country's earlier agreement with its European rival, Airbus. Iran also has ordered 20 airplanes from French-Italian aircraft manufacturer ATR.

"The initial talks were held and I can say Boeing is negotiating with the U.S. officials and possibly the amount of our purchase is equal to Airbus," Akhoundi said.

If the deal goes through, he said the first Boeing plane could arrive in Iran in October.

The overall size of the proposed Boeing sale to Iran remains unclear. Ali Abedzadeh, the head of Iran's Civil Aviation Organization, was quoted Sunday by the state-run IRAN newspaper as saying the sale would involve 100 Boeing aircraft, something the manufacturer has declined to discuss.

Boeing has been cautious about entering Iran's market as other sanctions remain in place against Tehran. American officials had said as recently as last weekend that the sale would need permission from the U.S. Treasury.

It's unclear what changed in the last few days. Treasury officials could not be immediately reached for comment. It is likely Boeing may run the sale through an overseas subsidiary and use a currency other than U.S. dollars in order to avoid running afoul of American laws.

Iranian airlines have some 60 Boeing airplanes in service, but most were purchased before the 1979 Islamic Revolution that ousted Shah Mohammad Reza Pahlavi and brought Islamists to power.

Out of Iran's 250 commercial planes, 162 are flying while the rest are grounded due to lack of spare parts, Akhoundi said Tuesday. Parts and servicing remained nearly impossible to get while the world sanctioned Iran over its contested nuclear program.

Included in last year's nuclear deal, which limited Iran's uranium enrichment in exchange for sanctions to be lifted, is approval for airline manufacturers to enter the Iranian market. However, American lawmakers have warned Boeing not to do business there as the Iran deal remains a hot topic in the ongoing presidential election.

At issue as well is Iran and America's long-standing suspicion of each other as the two countries haven't had direct diplomatic relations since 1979.

For Americans, it is the U.S. Embassy takeover during the Islamic Revolution and its blacklisting of Iran as a state sponsor of terrorism. For Iranians, it is the American- and British-backed 1953 coup that installed the shah, as well as the U.S. Navy's 1988 downing of an Iran Air commercial jet heading to Dubai.

Since the nuclear deal, Iran also has conducted ballistic missile tests, launched rockets near U.S. warships in the Persian Gulf and briefly captured 10 American sailors. The Shiite power also has seen relations deteriorate with the Sunni kingdom of Saudi Arabia, a major U.S. regional ally.

Iran's Supreme Leader Ayatollah Ali Khamenei has expressed his continued distrust of American brands coming into the country. Comments Khamenei made in April apparently caused Iranian officials to strike models from General Motors Co.'s Chevrolet division off a list of allowed automobile brands for the Iranian market.

Khamenei also questioned purchasing aircraft in a speech June 14.

"This is a very important and necessary task, but is it a priority?" Khamenei asked, according to a transcript on his official website. "Imagine that we buy 300 airplanes. It is not clear whether this is a priority or not. This should be studied."

Some advocacy groups concerned about Iran's nuclear arsenal have alsolaunched campaigns criticizing potential business deals. United Against Nuclear Iran, a New York-based group, for example, has been warning companies of legal problems in the US if they do business in Iran.

But despite the obstacles, if the Boeing purchase moves forward, it could provide a key boost for advocates of the nuclear deal who say it is critical to ensuring warming relations between Iran and the United States and other Western powers.

"The Boeing deal would be really important," Cliff Kupchan, chairman of the Eurasia Group, a Washington-based political risk consulting firm, told The New York Times. To ensure relations are warming, he said, "Iranian elites have to know that the U.S. wants constructive interaction. If Boeing sells 100 planes to Iran, it would send exactly the right vibe."